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Gold falls after U.S. Fed dampens hopes for more stimulus
· Gold prices fell on Thursday to the lowest in more than a week, after the U.S. Federal Reserve dashed investors’ hopes for more stimulus to support the coronvirus-hit economy.
· Spot gold dropped 0.8% to $1,943.87 per ounce, after falling to its lowest level since Sept. 9 at $1,932.36. U.S. gold futures settled down 1.1% to $1,949.90.
· “Despite the fact that the Fed was quite dovish, it would seem that for the gold market it wasn’t dovish enough,” said Bart Melek, head of commodity strategies at TD Securities. “There is concern that with no more Quantitative Easing, there might be less momentum for gold.”
· The Fed pledged to keep rates pinned near zero levels until inflation was on track to “moderately exceed” its 2% inflation target “for some time”.
· Bullion has gained 28% so far this year, helped by near-zero interest rates globally and demand for a hedge against perceived inflation.
However, the U.S. central bank also stated that it expected a faster economic recovery than previously forecast, with unemployment falling more quickly than it had expected in June.
· “Many were hoping for more clarity on how the Fed plans to stoke inflation in the coming months,” Kitco Metals senior analyst Jim Wyckoff said in a note.
Wyckoff added that even though we’re seeing selling pressure in gold and silver, “such situations have also invited metals bulls to step in and buy the dips to keep the overall price uptrends alive in gold and silver.
· Meanwhile, U.S. new jobless claims remained perched at higher levels last week suggesting stalling labor market recovery.
· Elsewhere, silver declined 1.4% to $26.85 per ounce, platinum dipped 3.5% to $934.70 per ounce, and palladium fell 3% to $2,327.51.
· BOE & BOJ decision
The Bank of England on Thursday left interest rates unchanged and maintained its current level of asset purchases, but warned that the outlook for the economy remains “unusually uncertain.”
The Bank also revealed that the Monetary Policy Committee had been briefed on plans to explore how a negative bank rate could be implemented effectively, meaning the BOE is now openly considering how to use negative interest rates.
Meanwhile in Asia, the Bank of Japan kept monetary policy steady on Thursday. In its monetary policy statement, the BOJ said the Japanese economy has started to pick up but remained in “a severe situation” due to the impact of the coronavirus pandemic at home and abroad.
· CORONAVIRUS UPDATES:
Global cases: More than 30.33 million
Global deaths: At least 950,139
U.S. cases: More than 6.87 million (+45,838)
U.S. deaths: At least 202,195 (+861)
India cases: More than 5.21 million (+96,793)
India deaths: At least 84,404 (+1,174)
Brazil cases: More than 4.45 million (+35,757)
Brazil deaths: At least 135,031 (+857)
· France reports highest number of new COVID-19 cases in a day
France registered a record 10,593 new confirmed coronavirus in the past 24 hours, health ministry data showed on Thursday, the country’s highest single-day count since the pandemic began.
The rise followed a government decision to make COVID-19 tests free, leading to a surge in testing and an increase in infection rates.
· Pfizer vaccine trial bets on early win against coronavirus, documents show
Pfizer Inc PFE.N is betting that its coronavirus vaccine candidate will show clear evidence of effectiveness early in its clinical trial, according to the company and internal documents reviewed by Reuters that describe how the trial is being run.
In recent weeks, Pfizer has said it should know by the end of October whether the vaccine, developed together with Germany's BioNTech SE22UAy.F, is safe and effective. If the vaccine is shown to work by then, Pfizer has said it would quickly seek regulatory approval. It has not said what data it would use.
President Donald Trump, who is seeking re-election, has said a vaccine to fight the coronavirus pandemic is possible before the Nov. 3 U.S. vote, raising concerns over political interference. Scientists have questioned whether drugmakers will have enough evidence to achieve success by that time.
· U.S. plans for hundreds of millions of cheap, fast COVID-19 tests
U.S. manufacturers are sharply increasing production of cheap, fast - but less accurate - COVID-19 tests, aiming for 100 million per month by year end that will enable schools and workplaces to significantly expand testing.
· U.S. Senate Democrats offer $350 million own China plan
U.S. Senate Democrats announced their own program to counter China’s global influence on Thursday, unveiling a sweeping $350 million package of legislation seeking to boost U.S. competitiveness and recast diplomacy with Beijing.
The plan was backed by 11 Democrats, including Senate Democratic Leader Chuck Schumer, but its prospects were unclear because President Donald Trump’s fellow Republicans control the Senate and determine which legislation it considers.
· U.S. economic rebound may be a slow train for the unemployed
In a week when leading forecasters boosted their view of the U.S. economic recovery, data on retail store traffic, small business hiring and other high-frequency indicators largely worsened, signaling a potential decoupling in which growth presses ahead while the job market slows to a painful crawl.
Federal Reserve officials on Wednesday projected a much smaller economic hit from the COVID-19 pandemic than initially expected, with U.S. output forecast to fall 3.7% in 2020 instead of 6.5%, as was forecast in June, a difference in dollar terms of more than $1.5 trillion. That stronger outlook came alongside upgrades from Goldman Sachs and others.
But Fed Chair Jerome Powell also said that restoring job markets will take time in an environment when some of the country’s main job generators - small businesses and labor-intensive service-sector firms - face the stiffest challenges from the coronavirus-triggered recession.
· U.S. labour market recovery stalling; housing market presses ahead
The number of Americans filing new claims for unemployment benefits fell less than expected last week and applications for the prior period were revised up, suggesting the labour market recovery had shifted into low gear amid fading fiscal stimulus.
Initial claims for state unemployment benefits fell 33,000 to a seasonally adjusted 860,000 for the week ended Sept. 12. Data for the prior week was revised to show 9,000 more applications received than previously reported.
A separate report from the Commerce Department on Thursday showed single-family homebuilding, which accounts for the largest share of the housing market, increased 4.1% to a seasonally adjusted annual rate of1.021 million units in August.
Further gains are likely, with building permits for single-family housing units accelerating 6.0% to a rate of 1.036 million units, the highest since May 2007.
Reference: CNBC, Reuters, Worldometers